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Monday, May 07, 2012

The Day After: Deciphering the Greek Election

People get the government they deserve. The Greek people finally got a chance to speak and they renounced the status quo. But what they said, precisely, is hard to decipher. To get a good answer you need to ask a good question; and this election was anything but a chance to ask good questions. It will take a while to truly make sense of the May 6 elections.

The collapse of the political system, long foreordained, came true. The first party got less than 19% of the vote; the top two received ~36%. By contrast, in every election since 1981, the top two parties have gotten at least 77% of the vote and as much as 87%. PASOK received its lowest share of the popular vote ever (even below the 1974 elections). In sum, 13 parties got more than 1%, while seven crossed the 3% threshold required to enter parliament (vs. five in the 2009 election). Another two came close. The participation rate, at 65%, is below the 71% rate in 2009.

Besides the fragmentation of the political system, there were six other big trends.

The first trend was the meteoric rise of the leftist coalition SYRIZA, which benefited the most from PASOK’s decline. This result hardens the leftist opposition and heightens the rhetoric against the bailout. It calls for a struggle and rejects many of the liberal reforms that are embedded in the memorandum. By showing support for SYRIZA, many voters found a leftist alternative to PASOK – but they also fell for a “we can have it all” rhetoric that is thin on options that can improve the country’s economic trajectory. The call for a further debt restructuring will likely get louder.

The second trend was the entry into parliament of Golden Dawn, an ultranationalist party, whose anti-immigrant rhetoric resonated with “law and order” folk and with people who feel besieged within ghettos where the writ of the state is absent. No doubt this will increase tensions in and out of parliament as the rhetoric of the two extremes will clash and perhaps clash violently. The apparent legitimization of the party’s extremism will certainly cause enormous introspection. Perhaps many who voted for Golden Dawn will be surprised by its extremism. But there is no doubt that this electoral result reflects two uncomfortable truths: that the country’s immigration “policy” is unsustainable and that the inability of the police to fight crime is creating extra-legal solutions. The positive is that if the state can respond to these legitimate needs, then support for this party can dissipate; the negative is that its influence may grow if these concerns are not addressed.

The third trend is the split of the liberal-reformist vote among three combinations, meaning that none ended up in parliament. Four parties (Dimokratiki Symaxia, Dimiourgia Ksana, Drassi and Fileleutheri Symaxia) collectively got ~6.5% of the vote. Electorally, this means nothing, of course, because none crossed the 3% threshold to make into parliament. But this number shows an instinct to support liberal reformists. Given that these parties suffered from a fear that a vote for these parties would be wasted (in a way, it was), the true support for these parties’ position is higher.

The fourth trend was the split between the urban and the rural vote. The major urban centers all went for leftist SYRIZA, while New Democracy carried almost all other areas. No election since 1981 showed a similar decisive split between the major cities and the rest of the country. What this means, I am not sure. It shows perhaps the different in radicalism between the larger and the smaller cities; it shows also a hesitation outside the major centers to fall for an “easy” leftist rhetoric.

The fifth trend was a massive diffusion of the popular vote: 19% voted for parties that did not enter parliament, up from 5% in 2009. This fact illustrates several realities. Of course, it means that a fifth of the public is effectively disenfranchised. Positively, however, it shows that so many people were willing to take a chance with their vote. Given the talk that voting for any party that was not clearly above the 3% threshold would be a waste, it is incredible to think that 19% of the people did so anyway. Finally, this number means that if we somehow ended up with another round of elections, a recombination of parties could lead to a substantial change in the composition of parliament.

The sixth trend was the support for parties with powerful rhetoric but thin programs. Inevitably, this is the nature of a protest vote. But more pessimistically, it means that this election was more or less wasted from public debate point of view. If elections are a chance to debate and discuss big ideas and policies – if they are a chance pick between competing outcomes, then this was a wasted opportunity. Try to interpret, for example, the vote against PASOK and New Democracy: was this a vote against the cumulative failure of the two parties in managing the country’s affairs over the past 30 years; was it a vote against their decision to sign the two bailouts (and if so, what should they have done?); or was is their decision to sign the memorandum but not implement it? I doubt that the result offers a definite answer to these questions.

The task now is to form a government. New Democracy and PASOK do not have sufficient deputies to carry a majority (their current tally is 149 vs. the 151 needed for a majority); even if they did, a majority of a few deputies would be too thin. Of the remaining parties, several have ruled out cooperating with New Democracy. Thus the hope of forming a government falls largely with the Dimokratiki Aristera Party, which is led by a sensible politician, and whose 19 deputies could add depth to a coalition. Even so, these three parties are only 38% of the vote – hardly a definitive mandate.

The alternative is no government at all with the prospect for another election. Such a scenario can be very bad, and there is one prospect in which it can be good. It is bad because it leaves Greece with no government. Our financing will be at risk, especially if the interim period is long. Our credibility will be shaken, and the threat of violence and social unrest will loom large. How can this scenario be good? A second round would do two things. First, it would allow people to move past voting “against” parties to voting for parties. Perhaps feeling that they registered a protest vote the first time around, people would be inclined to support specific agendas rather than merely reject agendas. Second, it would allow for a consolidation of like-minded parties. Given that so many votes went to parties that did not enter parliament, a combination of such forces could form a powerful electoral presence.

How do these elections impact the big picture? Let me give you a political take and then a personal take. The political assessment is that we are likely to form a government, though the chances are about 60% to 70%. The aim of this new government will be to lessen the impact of the second bailout. The end result, it seems to me, is a weaker consensus in favor of reforms and more support for another debt restructuring, which this time will include the official sector. More or less, this is the status quo with a weaker ability to move forward with privatizations and with labor reforms.

In this world, the “good” is progressive debt relief coupled with incremental reforms. The “bad” is a change in the European consensus in favor of reform, where the pressure to change some long-standing ills dissipates and Greece doesn’t really change. The ugly scenario is deterioration in social cohesion and order, coupled with a disintegration of the state. This scenario is more connected to a disorderly Eurozone exit (either as the cause or as the effect) plus social violence along ethnic and class lines. What are the odds of each? I don’t know but all scenarios have a non-trivial chance of happening.

Now my personal take. In a way, the election saddens me because it was a wasted election: there was a clear vote of frustration, and insofar as this helped released some tension, fine. But the country had no real debate about issues – about what went wrong or about what options are available in the future. The people fell for a rhetoric of “we can have it all,” which we cannot. Perhaps the situation was too dire to have a calm and reasoned debate. But if we cannot have a real conversation when faced with an existential threat, when our choices are life-and-death choices, then when?

The strong SYRIZA vote disappointed me, as did the Golden Dawn vote. The
Golden Dawn vote I can understand, and with measures that are hardly groundbreaking, the movement’s momentum can be deflated. The SYRIZA vote, by contrast, tells me that the country’s leftist instincts will be hard to overcome. In my mind, if you look at the last thirty years and your conclusion is that the country has not had enough leftist policies, then I am lost for words. And that means that the crisis has no catharsis yet.

Let me end on a positive vote. The collapse of the political system means the field is still wide open to new politics, to new parties and to new people. We have destroyed the old but have not quite erected the new. This is an opportunity. A full 19% of the people were courageous enough to gamble with their vote, showing a willingness to experiment and to try paths outside the establishment. For someone who yearns for regeneration, this is a good omen. Even more so, the liberal parties got 6.5% of the vote – if people were not afraid that voting for them would mean a wasted vote, their share could have been higher, perhaps 9-10%. Given the country’s current electoral dynamics, this is a potent political force.

And so the elections reinforced my ambivalence – they showed a leftist instinct that will be hard to upend, but they also demonstrated some clear reformist tendencies. Clearly, the latter have yet to find a definitive and compelling political representation. My hope is that this momentum will grow – this is by no means my base case scenario, but it is by far the only scenario that gives me any hope. Here’s hoping.

And yet the exit polls revealed that about 20% of the voters consider that SYRIZA and Independent Greeks' promise to denounce the memorandum conditions and remain in the Euro area is feasible while 70% think it's impossible!It's clear that the Greek people used this election as an opportunity to punish PASOK and New Democracy,rather than being taken in by silly rhetoric again.But now I shudder at the idea of anarchy...A shame that those of us who voted with common sense are going to suffer the consequences of these elections.

I am reminded of the book "Why Nations Fail" which I read recently. They argue that extracting social systems where (often corrupt) elites have entrenched themselves cannot succeed over time because those elites are fearful of or do not allow “creative destruction”. Creative destruction, however, is the prerequisite for bringing real change and real improvement about.

Well, Greece has had its moment of creative destruction yesterday. Why not think positively and now wait for the new to replace the old.

I heard Syriza may form government. Finally, it comes to power. It's not an anti-sistem party anymore. This will be the end of Syriza, you'll see. Hopefully, the extreme right will fade way, too, to is right place. No, they're visible. KKE, on the other hand, will survive gracefully. ND and PASOK will be back. Greece is heaven to political scientists.

My analysis is simply that the Greek electorate acted like it always has - by favoring the political parties telling the most pleasant lies. The difference this time being that ND and PASOK were beaten at their own game.

Well, the beautiful thing about democracy is that the people get the government they deserve.

Reform (though I agree within the context you present) will do nothing for Greece, for Europe and for the rest of the West as well. There is no growth coming, and the official debts, combined with unfunded liabilities and private debt are far, far too large. It's too late in the game my friend.

There's a major, earth changing event coming and nobody knows what the black swan will be, but when it hits and rock bottom is reached, I hope the people will wake up to what trickery socialism is, it's the "bankster's" best friend.

Nations need to control their currencies, not bankers. They need to anchor it to something of value, or at least not allow it to be debauched. Governments need to be restrained and minimized. People need to heed the words of Bastiat and Locke; always remember and live by the right to Life, Liberty and Private Property.

"The SYRIZA vote, by contrast, tells me that the country’s leftist instincts will be hard to overcome."

A rather cynical, business-oriented greek poster, recounted an anecdote on Sunday. Scene: a cafe in Athens.

It's election day, and the people there decided to hold a straw-poll. Everybody had voted for Syriza. Not one thought that they would try and actually put their "call-their-bluff-and-default-if-we-have-to" election platform into effect.

Reading it made me, thinking about it, furious. Coming from a background in german history, though not german, I thought:

"Hang on! This is 1931-3 all over again".

It's a hard lesson. If a party tells you their platform, it's much safer (for the survival of democracy) to believe that they mean it. Not to assume it's a joke.

oh yes, and something else (I'm not sure if it's positive or negative).

There does appear to be this widespread delusion amongst greek voters that the Troika are bluffing, and won't let Greece default? My impression is, this impression was widely believed, across the political spectrum.

That's very dangerous. Partly because it's utterly wrong, and partly because, if greek voters are now gradually starting to sense that it's wrong (they read the news and the internet, they probably are sensing that by now), this will strengthen the anti-Memorandum vote, because people will feel that Europe is rejecting them.

(They're not. They're just out of patience, and Tsipras being bombastic is just the final straw. But that's irrelevant, it's the perception of the greek voter that counts).

Nikos, do you have any information about the position (if applicable: real vs. rhetorical position) of SYRIZA on the problem of tax evasion?

Without having any specific information on the subject it would seem perfectly logical to me, if the tax evaders would try to instrumentalize leftist rhetorics for their own [shortsighted] benefit, hoping that us fellow Europeans will pick up the bill for them.

Is there any evidence that this special interest group might be behind SYRIZA?

Other than that, I've read that SYRIZA was voted for heavily by the state employees, because the leftists promised not to reduce their numbers. Presumably, such employees would be more concentrated in the larger cities, in particular Athens. So that might explain the greater leftist leanings of the voters in the large cities vs. smaller towns + countryside.

Nikos, do you have any information about the position (if applicable: real vs. rhetorical position) of SYRIZA on the problem of tax evasion?

Without having any specific information on the subject it would seem perfectly logical to me, if the tax evaders would try to instrumentalize leftist rhetorics for their own [shortsighted] benefit, hoping that us fellow Europeans will pick up the bill for them.

Is there any evidence that this special interest group might be behind SYRIZA?

Other than that, I've read that SYRIZA was voted for heavily by the state employees, because the leftists promised not to reduce their numbers. Presumably, such employees would be more concentrated in the larger cities, in particular Athens. So that might explain the greater leftist leanings of the voters in the large cities vs. smaller towns + countryside.

Beyond Debt: The Greek Crisis in Context

Language / Γλωσσα

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About Me

greekdefaultwatch@gmail.com
Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.